SINGAPORE- Asian shares steadied from early losses on Monday as investors placed their hopes on a coordinated global monetary policy response to weather the damaging economic impact of the coronavirus epidemic.
Pandemic fears pushed markets off a precipice last week, wiping more than $5 trillion from global share value as stocks cratered to their steepest slump in more than a decade.
The sheer scale of losses prompted financial markets to price in policy responses from the US Federal Reserve to the Bank of Japan and the Reserve Bank of Australia.
Futures now imply a full 50 basis point cut by the Fed in March while Australian markets are pricing in a quarter-point cut at the RBA’s Tuesday meeting.
Also helping calm market nerves, Bank of Japan Governor Haruhiko Kuroda said on Monday the central bank would take necessary steps to stabilize financial markets.
In equities, Chinese shares opened higher with the blue-chip index up 1.5 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.4 percent, turning around from a loss of about 0.3 percent earlier in the day.
E-minis for the S&P500, which were down more than 1 percent at one point, were last up 0.3 percent while Japan’s Nikkei, which opened 1.3 percent lower at a six month trough, climbed 0.4 percent.
Australia’s S&P ASX/200, which had tumbled 3 percent, was last off 1.8 percent.
Benchmark US 10-Year Treasuries hit a fresh record low of 1.0750 percent.
Despite some stability in the market, analysts still expect volatility to persist.
“Any signs that new cases are beginning to taper could be seen as a positive catalyst for the market especially given that some of the market complacency has reduced with equity valuations much lower vs few weeks ago,” Nomura analysts wrote in a note.
“In the very near term until 1Q reporting results, we expect Asian equities may remain quite volatile,” they added.
“However, on a medium term basis we believe the risk-reward is now getting favorable, assuming the virus does not take the form of a virulent global pandemic.” — Reuters
